What’s Next for Xbox? ⭐

I spent three hours this past Saturday playing Silent Hill f on a laptop. My wife wasn’t feeling well, so we weren’t going anywhere, and I was too out of it to get any meaningful work done. Plus, I’m trying once again to expand beyond Call of Duty and play something a little different.

This experience triggered some thinking.

As a game, Silent Hill f is … whatever. It’s fine, I guess. I like horror content as a rule, but it’s been a while since a horror game has held my attention. And I’m not sure I can say this game does that. The puzzles and combat sequences are both annoying, and the game is pretty much all puzzles and combat sequences once you get past the plot. Which doesn’t seem to tie into previous Silent Hill games in any meaningful way.

But this isn’t about any particular game. Instead, my mind drifts to how I acquired this game and where I’m playing it. If Microsoft is able to pull off itss unprecedented attempt to redefine what Xbox is, my experiences with Silent Hill f and other games I’ve played recently will become the new normal. And Xbox as originally conceived over 25 years ago will be no more.

There is both good and bad in this transition, but in the sense that change is one constant in personal technology, fans should perhaps relax a bit when it comes to their expectations. While many are actively mourning the death of Xbox as a videogame console platform, opening up Xbox to more games, gamers, and devices is inarguably an improvement. But there are some key issues that need to be overcome before we can decide whether the Xbox of the future can be successful.

? How we got here

In What Exactly is Xbox Now? (Premium), I examined what I see as the three core pillars of Xbox: Hardware, software, and subscriptions. Despite my familiarity with Xbox, I was a little surprised by what I found.

Hardware, predictably, is the most problematic because Microsoft never cracked the code on how to make a profitable console. Software is now the crown jewel: Xbox—or Microsoft Games—is now among the biggest game publishers on earth, and this would be a profitable and thriving business if it weren’t for hardware. And while Game Pass subscriptions are an open question, it’s possible that growth has stalled because of the negative impacts of the Activision Blizzard acquisition, which triggered price increases and the removal of the most popular tier with its day-one access to newly-released games.

Throughout that article and in previous musings, I pulled together Microsoft’s public comments about the future of Xbox, examined the other information we’ve received in leaks and rumors, and made educated guesses about what happens next. But some of these guesses are more educated than others, and there are issues we’re just not privy to outside the company, so there could be surprises to come down the road. Here, I am considering a broader range of possibilities. There are some alternative timelines in which Xbox rises Phoenix-like to fame and fortune and some in which Microsoft simply gives up and pulls the plug. But the more likely outcome is somewhere in the middle.

One thing is clear: The future of Xbox is not about consoles. After raising the price of its consoles twice in 2025, a first, Microsoft inserted an interesting line into a support document on its website that seems to have little to do with the price of its consoles. “Looking ahead, we continue to focus on offering more ways to play more games across any screen and providing value for Xbox players.” In other words, consoles are not the future, they’re the past.

But there are interesting parallels to the past in Microsoft’s new Xbox strategy. And when you view what it is now doing and compare that to how it entered this market in the first place, you may be surprised to discover more continuity than you expected, and less change. And that is true across all three Xbox pillars.

Let’s dive in.

? Hardware

When Microsoft entered the videogame console market in 2001 with the original Xbox, it was filling a hole left open by the exit of Sega, whose comeback hopes were dashed by the failure of Dreamcast. The OG Xbox was a lot of things, but primarily it was a PC designed to bring Microsoft’s then-new DirectX technologies to an even bigger audience.

It’s important to remember the dynamics of this era. Microsoft and Windows ruled personal technology in the late 1990s, when the OG Xbox was conceived. Videogame companies like Nintendo and Sony were among several perceived competitors from outside the PC space that threatened Windows at a time when it had no real direct competition. And Xbox could create a virtuous cycle because its PC-based DirectX nature made it easy for developers to port games from the PC to console and vice versa: Xbox would help Microsoft “embrace and extend” its Windows dominance into yet another market.

Whether this strategy was successful or not is debatable. The OG Xbox was reasonably successful, but the Xbox 360 did tremendously well despite endemic reliability issues, though its successes were dwarfed by those of the Nintendo Wii. And subsequent Xbox hardware generations, the Xbox One series and Xbox Series X|S, both got off to bad starts and performed poorly. But Microsoft continued to update DirectX, and Windows and PC remained an important videogame platform throughout this time. Today, notably, it is more important, because it is more popular, than the Xbox Series X|S.

Microsoft is lucky to have a presence in both markets, though PC and console have both suffered at that hands of mobile gaming, especially on smartphones. There are now several billion smartphones in use, everyone has one, and this has dramatically expanded the market for games. Granted, most mobile games are not as sophisticated as the biggest and best PC and console games. But the sheer reach of this market cannot be denied. Where a videogame console like Xbox can be used in a single room in a home, smartphones come with you everywhere. This gives gamers more choice, not just in which games to play, but when and where.

In short, mobility matters.

Nintendo has seen a lot of success over the years with portable game devices and it’s not coincidental that its latest consoles in the Switch series are hybrid devices that can be used at home or on the go. And Sony has seen less success in this area, with its short-lived PSP line of handheld gaming machines long gone and its most recent entry, the PlayStation Portal, is more a console peripheral than a standalone device.

But Microsoft has had no real presence in mobile gaming despite internal discussions from time-to-time about making an Xbox portable gaming device. The issue, of course, is history: Given its inability to sell recent Xbox console generations successfully, Microsoft’s senior leadership has been unwilling to greenlight new hardware initiatives.

This is why Microsoft shifting to a PC-based approach for Xbox hardware is so important. It frees Microsoft from having to be the sole provider of Xbox hardware. It allows Microsoft to take advantage of the breadth and depth of the PC market and partners that are already much more successful than it is selling hardware. And there is already a market for PC gaming that includes both desktop and portable hardware. All Microsoft has to do is tap into it.

The timing is right. Almost two years ago, I weighed in on how even mainstream PC laptops have evolved to the point where they can easily play AAA games with high quality, and things have gotten even better since then. Those who need more have dozens of gaming laptop designs from which to choose, each offering dedicated graphics that amp up the performance and quality even higher. But even an average business class laptop is a viable gaming machine today. This market has changed dramatically.

We’ve also seen the rise of PC-based mobile gaming devices like the Steam Deck that try to bridge an interesting gap between the “it just works” world of standalone game devices and the versatility and choice we get with computers. Steam Deck is based on Linux, so it’s a competitive threat to Windows and Xbox. And so it’s not surprising that Xbox wanted to create a competing platform based on Windows.

But when Microsoft leadership nixed that idea, Xbox made lemonade and partnered with existing gaming PC makers to start its push to bring Xbox to the PC. The first of those devices, at least officially, is now in the market as the Xbox ROG Ally gaming handheld series. But there are several other PC-based gaming handhelds from Lenovo and others that will make this shift as well in the near future.

When it comes to PC-based videogame hardware, there are traditional x64 platforms as we see in laptops and desktops, but there are also custom x64 chips designed for handheld gaming PCs, Arm-based hardware from Qualcomm and, soon, others, and the expected entry, soon, of Nvidia, which has long dominated PC graphics. At some point, the choice and variety of the PC market become undeniable, and whether you prize battery life and efficiency or raw performance, you have, and will continue to have, all kinds of choices.

Why this rankles some Xbox fans doesn’t make sense to me. For Microsoft strategically, this is a gain of epic proportions. Xbox has never won a console generation and its hardware has never been profitable. By leaning on the scale and scope of PC-based gaming, Microsoft immediately expands Xbox as a platform in ways that Nintendo and Sony can’t duplicate. And by working with partners like Asus on hardware, it eliminates the associated costs and losses there, too.

The first Xbox gaming handhelds won’t save Xbox hardware, this is just too niche of a market to make that kind of difference. But the ROG Xbox Ally gaming handhelds are still important proof points for third-party Xbox console hardware that runs Windows. And whatever success they achieve will inform future device decisions. On the current x64-based hardware, Windows is more resource intensive than Linux and so it runs games more slowly or poorly. But Windows also offers a dramatically better gaming library than does Linux. And so streamlining Windows to more efficient and performant on these devices is important.

But moving to Arm would be an even bigger step forward. And it’s clear that this is the longer-term goal. To get there, Microsoft has to improve the underlying platform and make it seamless for game developers to port or recompile their titles to be native on Arm. And its silicon partners–Qualcomm today, with others to follow–need to improve the performance of their graphics chipsets.

Of course, for Microsoft to successfully shift Xbox from console to PC, it has to get the software right. And that, well. That’s going to take some work.

? Software

To ensure some level of success for the original Xbox, Microsoft needed content. In-house at the time, it had a few successful titles like Flight Simulator and Age of Empires, but neither was suitable for a controller-based console. The company successfully wooed some developers to the new platform, and it even attempted to acquire companies like EA and Nintendo. But it finally found the hit launch title it needed when a tiny company named Bungie announced the game Halo: Combat Evolved.

To that point, Bungie was best known for two Mac-based Marathon games that it had released in the 1990s. Halo was originally designed to run on Macs and Windows PCs, as Apple was careening towards bankruptcy and the Mac was increasingly irrelevant as a platform. But after a Macworld live demo of the game in 1999, Microsoft swooped in, acquired Bungie for an estimated $30 million—the amount was never disclosed—and Halo became an Xbox exclusive launch title (though it was subsequently released for Windows and Mac later as well). It went on to become the flagship game franchise for Xbox.

Decades later, Microsoft acquired Activision Blizzard for $68 billion in a bid to fully transform Xbox into a game publisher. The massive success of several Activision Blizzard franchises, most notably Call of Duty, combined with previous acquisitions like Bethesda and the many other games and franchises owned by Microsoft Games is notably tied to a lack of exclusivity. These games, by and large, run everywhere possible, including on rival Nintendo and Sony platforms.

In this modern era, it’s not enough to have a single flagship game franchise. And you can see how the stakes have raised dramatically when you compare the cost of acquiring Bungie to that of acquiring Activision Blizzard (and Bethesda, and others) all those years later. Videogames have become much more sophisticated over the past 25 years, and AAA titles, in particular, are a lot more expensive to create. Consumers expect variety, and Microsoft is betting that they will expect their games to work wherever they are.

As Microsoft progressed from the OG Xbox to the Xbox 360 and beyond, it faced a familiar problem with videogame consoles. Dating back to the original Atari 2600, it was rare for any new console to play games designed for previous generation consoles. This was true of subsequent Nintendo, Sega, and Sony consoles, too. When you bought a new console, you would keep the old one around if you wanted to keep playing its games.

Microsoft decided to go a different route and, in doing so, it created a new value for the Xbox ecosystem that exists to this day. Though the Xbox 360 was architecturally different from the OG Xbox, being based on PowerPC processors instead of more traditional, PC-based x86 chips, Microsoft created a Backward Compatibility program for the new console and set out to bring as many OG Xbox titles forward as was possible given the licensing restrictions.

This is interesting on many levels. But the OG Xbox didn’t sell particularly well compared to its Nintendo and Sony competitors, and one might have forgiven Microsoft for orphaning such a small audience, especially given that virtually all console makers had done so for decades to that point, and with far more popular devices.

Perhaps Microsoft understood the tenuous nature of its new entry to this market. Or perhaps it saw value in the loyalty of its earliest fans. Whatever the reason, backward compatibility became the cornerstone of the value proposition of Xbox. And as the firm moved forward with subsequent generations of consoles, including the Xbox One series and Xbox Series X and S, it retained and enhanced its Backward Compatibility program.

Microsoft says that it is working on a next-generation Xbox console. Whether that sees the light of day or not is in some ways beside the point. But bringing Backward Compatibility forward is the point, at least from a software perspective. Xbox—or Microsoft Games, or whatever we’re calling this business now—will continue to offer a cross-platform strategy to ensure that as many games as possible are playable on as many device types as possible. But for Xbox as a platform, Backward Compatibility is key.

So, yes, one can safely assume that some future Xbox console will continue to offer Backward Compatibility, ensuring that gamers’ libraries come forward with them. But what if there is no future Xbox console? Or what if that “console” is really just a Windows PC, as I believe will be the case, similar to what we’ve seen already with the first Xbox Ally gaming handhelds?

The future of Xbox software, to my mind, is all tied to Backward Compatibility. For Xbox to make sense as a platform that is not tied solely to a console, our game libraries must move forward too. That is, our Backward Compatible Xbox game libraries, across OG Xbox, Xbox 360, Xbox One series, and Xbox Series X|S, should all be playable on Windows PCs, too.

This seems straightforward technically: Xbox One series and Xbox Series X|S both utilize PC-like architectures, similar to the OG Xbox. And that should ease the transition. I suspect the bigger issue here is licensing-based, and that much of the work Microsoft is now undergoing to make this future real is tied to legal issues and negotiations. But even that feels straightforward: By redefining what Xbox is as a platform and by selling something Windows-based that it will call an Xbox console, Microsoft should be able to overcome whatever objections. Even a subset of the full Backward Compatible games list would be a nice benefit.

Between all the game studios and Backward Compatibility and related Xbox platform features, you can see how the future of Xbox software unfolds. And it’s not all that different from the past: Though true consoles will diminish and then disappear, the respect of the past and our continued ability to play those games we’ve purchased on new hardware going forward remain. This, to me, is the real value of Xbox as a platform. Not some slice-in-time hardware device.

Unfortunately, relying on Windows to bail out Xbox is also dicey. Where Xbox consoles run a stripped-down, Windows-based Hyper-V environment called Xbox OS in which games get as many system resources as possible, Windows is, well, Windows. It’s a terrific foundation for a general purpose personal computing platform in which the system doles out resources to multiple apps and services all running side-by-side. But it is less than optimal for a dedicated gaming machine. And so some changes are in order.

The Xbox Ally gaming handhelds provided our first peek at what these changes might achieve. These devices are PCs running a specially tailored version of Windows 11 that runs in a Full Screen Experience (FSE) by default and cuts down on background tasks and other resource-hogging activities. Key UIs like the Xbox app, which serves as the shell, and the Game Bar have likewise been customized to work well in this new environment. And while these devices are not quite console-like from a reliability and general usage perspective, they are a nice step forward compared to traditional laptops and PCs.

More work needs to be done. But further refinements to the FSE should make Windows ever more viable as an alternative to Xbox OS. The biggest issue I’ve identified so far is updating. Today’s AAA games are massive on disk and often deliver massive, multi-gigabyte updates, and there is nothing worse than starting a favorite game only to be told that you have to wait until you’ve downloaded and installed an big update. The PC needs the background install capabilities we see on Xbox consoles and it needs it yesterday.

This is one area in which an Arm-based PC hardware platform like Snapdragon X could be particularly ideal for gaming handhelds and Switch–style hybrid consoles. But even with x64 systems, further refinements will enable future Xbox consoles—portable or not—to run not just backward-compatible Xbox console games, but the even  more vast library of PC games. And that library spans third-party PC game stores and services like Steam, Epic Games, GOG, and many more.

That is, pardon the pun, a game changer. One of the PC’s biggest advantages when it comes to playing games is all the choices we have when it comes to acquiring games. Instead of being locked to a single ecosystem as on Xbox and other consoles, PC gamers see choice and competition. When I went to purchase Silent Hill f, for example, I chose the store that offered the best price. It’s the same game no matter where I buy it, after all.

?️ Subscriptions

The original Xbox was unique for many reasons, but it was the first to ship with a hard drive and, intriguingly, an Ethernet port. This was radical in 2001, an era in which most customers were still getting online using a dial-up connection. But Microsoft had plans for an online service called Xbox Live that would debut a year later, in 2002. And key among those plans was creating an online community in which Xbox fans could easily interact.

When you consider the rise of social media and mobile computing in subsequent years, this vision is all the more impressive, as Microsoft saw a world of interconnectivity at a time when consoles were isolated from each other. This would help deliver game updates to fix security and quality issues in the future. But Xbox Live was also about a then-new monetization strategy. In addition to selling consoles and other hardware and getting a cut of individual game sales, Microsoft saw a future of microtransactions. Gamers might pay to play against each other online, but also for in-game items, now called downloadable content (DLC). Perhaps one day they would even buy entire games online and then download them to their console.

That vision would take years to unfold, but unfold it did. In the beginning, we could download smaller Xbox Arcade games directly to future Xbox consoles. The Xbox 360 also introduced game updating, rendering the optical disk one purchased just a starting point when it came to installing a game. And then we could finally download and install games digitally, online. Today, that is the mainstream, normal way to acquire games. But the underlying online service, Xbox Live, is what makes it happen, at least on this platform.

And Xbox Live has evolved. In fact, it’s been supplanted by Xbox Game Pass, a growing family of subscription services that expand on the original Xbox Live vision by adding libraries of games that gamers can choose from. Instead of paying for a game outright, one might instead subscribe to some Xbox Game Pass subscription and play whatever games it offers in its library. This is like Netflix, but not really: Those games need to be downloaded and installed first, though a related service called Xbox Cloud Gaming does enable some titles to be streamed online as well.

Xbox Game Pass began as a way to help developers monetize back catalog titles that few customers were buying anymore. But with Xbox hardware floundering, Microsoft expanded Game Pass with Day One privileges for all Microsoft Game Studio titles. This was a considerable boon for subscribers, but it became untenable with the expensive Activision Blizzard acquisition, as some titles, like those in the Call of Duty series generated too much money from purchases to allow them to be given out free, essentially, to Game Pass subscribers. As so Microsoft inevitably cut back on the Day One privileges, leaving them intact only in the most expensive Xbox Game Pass tier.

Whether Xbox Game Pass makes sense today is an open debate. But with the shift to a PC-based platform, Game Pass remains an interesting piece of the Xbox value proposition, and it’s there for those who prefer it. Some will continue to purchase the games they play outright, and they have a choice of stores on PC. Some like the variety Game Pass offers and will choose from the games available in the library provided by their subscription. And some will do both, of course.

Of course, the PC has its own dynamics and some elements that defined Xbox Live Gold back in the day, like multiplayer matchmaking and gaming, are generally just available for free on PC. And so Game Pass continues to evolve, as it must.

?️ The road ahead

Before I purchased Silent Hill f, I examined a few related titles and looked to see which were available in different stores and services. When I finally settled on Silent Hill f, I simply purchased it where it was the least expensive, as noted above. And then I installed it and began playing it on a PC laptop.

I could play this game on an Xbox Ally gaming handheld or a similar PC-based gaming device. That would give me a slightly more streamlined experience thanks to the FSE, even in this early rendition, but that didn’t matter to me and I prefer larger laptop displays anyway. What I did get in going with a PC version of the game was choice. I can play on a laptop with integrated graphics, and I’m sure the experience would be fine. But the laptop I’m playing this game on has dedicated Nvidia graphics and the performance and quality of the gameplay are impressive. Granted, one has to put up with the resulting fan noise as well.

PCs are also upgradeable and this purchase will move forward to whatever PCs I own in the future. If that future also includes playing all my Backward Compatible Xbox (console) games too, all the better. That’s been true to some degree on Xbox consoles, uniquely, but not elsewhere, and the PC makes this better than ever. I also have considerable game libraries across Steam, Epic Games, GOG, and other PC game stores too. As is always the case on PC, the number of choices is a win. This just isn’t possible on consoles today.

I also happen to play PC games using an Xbox wireless controller, and that experience will have an obvious impact on some future platform shift from console to PC. Xbox Ally gaming handhelds have controllers built-in, basically. But perhaps we will see a future Xbox “console” that’s really a NUC or some other small form factor (SFF) PC. It doesn’t matter. I will continue using a controller.

In short, I’m ready. And despite all the complaints and worry I see in the community, I feel like most Xbox fans are ready, too. This assumes some things tied to Backward Compatibility, especially, and the viability of Windows on a PC-based dedicated gaming device. These feel obvious to me. And when you think about it, Microsoft isn’t moving Xbox to the PC, it’s moving Xbox back to the PC. This is how it all began, and though no one could have predicted the current shift, this about-face, 25 years ago, it’s perhaps more natural and desirable than critics can admit to themselves.

For Xbox to survive, it needs to change. And that change means returning to its original roots. It’s different than it’s been, yes. But it still retains those things that make Xbox special while expanding what it means to be Xbox in what I feel are exciting ways.

Now we just have to rely on Microsoft not screwing this up.